Crude hits 7-year high on low supply
Oil prices surged more than $1 on Tuesday, reaching their highest levels since October 2014, amid hostilities in the United Arab Emirates.
Global benchmark Brent crude futures jumped $1.37, or 1.6%, to $87.85 a barrel by 7:38 GMT. US benchmark West Texas Intermediate (WTI) crude futures rose even more – by $1.71, or 2%, reaching $85.53 a barrel.
The oil market was reacting to news from the United Arab Emirates after reported attacks by Yemen’s Houthi movement, sparking fears of supply disruptions. The Houthi group reportedly launched drone and missile strikes against Abu Dhabi on Monday, killing three and causing explosions near the city’s airport and an oil refinery in Musaffah. The UAE slammed the hostilities as “war crimes” and launched airstrikes on the Houthi-controlled Yemeni capital in retaliation.
Meanwhile, other oil producers from the Organization of the Petroleum Exporting Countries (OPEC) are also facing difficulties in keeping up with last year’s agreement to boost output amid underinvestment and outages. Analysts say the situation could lead to oil reaching “triple figure prices” as demand is expected to overshoot supply in the coming months.
“If current geopolitical tensions continue and OPEC+ members can’t deliver on their 400,000 barrel per day increase… prices [could] push toward the $100 mark which is where the next (meaningful) technical resistance level lies,” Ash Glover of CMC Markets was quoted as saying by Reuters.
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